Blockchain for compliance: an information processing case study of mandatory supply chain transparency in conflict minerals sourcing
Abstract
Purpose
Firms are increasingly pressured to comply with mandatory supply chain transparency (SCT) regulations. Drawing on information processing theory (IPT), this study aims to show how blockchain technology can address information uncertainty and equivocality in assuring regulatory compliance in an interorganizational network (ION).
Design/methodology/approach
IPT is applied in a single case study of an ION in the mining industry that aimed to implement blockchain to address mandatory SCT regulations. The authors build on a rich proprietary data set consisting of interviews and substantial secondary material from actors along the supply chain.
Findings
The case shows that blockchain creates equality between actors, enables compliance and enhances efficiency in an ION, reducing information uncertainty and equivocality arising from conflict minerals regulation. The system promotes engagement and data sharing between parties while protecting commercial sensitive information. The lack of central authority prevents larger partners from taking control. The system provides mineral provenance and a regulation-compliant record. System cost analysis shows that the system is efficient as it is inexpensive relative to volumes and values of metals transacted. Issues were identified related to collecting richer human rights data for assurance and compliance with due diligence regulations.
Originality/value
The authors provide some of the first evidence in the operations and supply chain management literature of the specific architecture, costs and limitations of using blockchain for SCT. Using an IPT lens in an ION setting, the authors demonstrate how blockchain-based systems can address two key IPT challenges: environmental uncertainty and equivocality.
Keywords
Acknowledgements
This paper is dedicated to Dr Alisha Tuladhar, who died in September 2022 as the research for this paper came to an end. Alisha’s desire to see her research have a positive impact on the world was a driving force behind the paper’s development and she contributed to its progress in the way that she contributed to everything she did: whole-heartedly and with intelligence and passion.
The authors would like to thank their respondents at Minespider for their participation and engagement in our research project.
The authors thank Andreas Wieland and Jens Roehrich for their helpful advice, who provided valuable and detailed feedback on drafts of the paper, and attendees of both the International Annual EurOMA Conference in Berlin in June 2022 and the Competitive Advantage in the Digital Economy (CADE) conference in Venice in July 2022, where several questions were asked which caused us to reflect on and improve the paper.
The authors would like to acknowledge the support from the EPSRC Centre for the Decentralised Digital Economy (DECADE) [EP/T022485/1], the European Regional Development Fund through the Interreg NWE project “Blockstart: Blockchain-based applications for SME competitiveness”, and the Bradshaw Research Institute for Minerals and Mining (BRIMM).
Citation
Tuladhar, A., Rogerson, M., Engelhart, J., Parry, G.C. and Altrichter, B. (2024), "Blockchain for compliance: an information processing case study of mandatory supply chain transparency in conflict minerals sourcing", Supply Chain Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SCM-11-2023-0585
Publisher
:Emerald Publishing Limited
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